As part Part III the Finance Minister announced
- Rs.1 lakh Cr Agri Infrastructure Fund for farm gate infrastructure for farmers.
- Rs.10000 Cr scheme for formalization of Micro Food Enterprises.
- Rs.20000 Cr for fishermen through Pradhan Mantri Matsya Sampada Yojana
- Setting up Animal Husbandry Infrastructure Development Fund Rs.15000 Cr.
- Promotion of herbal cultivation Rs.4000 Cr.
- Bee keeping initiatives Rs.500 Cr
- From Top to Total Rs.500 Cr
If you go into the details
- Rs.1 lakh Cr is only a loan facility.
- Rs.10000 Cr also appears to be a part of budget. (PPP)
- Rs.20000 Cr for fishermen is not known unless details are announced. For the ban period support to fishermen they have to pay Rs.75 per month and state government has to pay Rs.75 pm. Only Rs.75 pm will be borne by centre that too for those who are below 60 years.
- Animal Husbandry Infrastructure fund of Rs.15000 Cr is for private investment in AH. This is too little.
- Herbal plantation is to be provided Rs.4000 Cr in the next 2 years. How it is Covid Relief?
- Rs.500 Cr for bee keeping is from budget.
- Top to Total Rs.500 Cr is for providing 50% subsidy for vegetable processing.
Other announcements of amendment to essential commodities act, agriculture marketing reforms and legal frame work for agriculture produce pricing are all in favour of corporates. Corporate agriculture in the form of co-op farming is pursued. Most of this are already in the budget 2020-21 and not new. (agriculture, irrigation and allied activities was provided Rs.1.60 Lakh Cr)
Rs.103 Lakh Cr for infrastructure in 5 years was announced in the budget. Out of that minimum Rs.20 Lakh Cr should be spent in this year. Where is it?
The more dangerous propositions have come though Part IV
- Fast track investment clearance through Empowered Groups of Secretaries (EGOS).
-This already exists. What is new in promotion of new champion sectors– such as solar PV manufacturing. This will help Adani a lot.
- 3376 industrial parks/estates/SEZs in 5 lakh hectares mapped.
-This is to be provided to private corporates.
- Policy Reforms – Introduction of commercial mining in coal sector. Nearly 50 blocks will be offered immediately.
-This government cancelled all coal auctions. Now it favours corporates of their choice. The trick is others will not be allowed to participate in the auction.
- Coal sector investment of Rs.5000 Cr
-This is part of budget.
- Mineral Sector– 500 mining blocks to be offered through auction– Remove distinction between captive and non-captive mines.
-Total privatisation which will exploit nature and destroy forest.
- Defense Sector – Corporatization of Ordinance Factory Board.
- FOI limit in defense manufacturing increase from 49% to 74%
-Is this self reliance?
- Air space and Civil Aviation – Restrictions on Indian airspace will be removed.
-Dangerous for the safety of the country.
- More world class airports though PPP.
-Before Guwahati Airport was given to Adani we could get tea inside the airport for Rs.10/-. Now it is Rs.65. This is one example of privatization. Kerala has not given Trivandrum Airport.
- Privatisation of electricity distribution in UTS.
-DISCOMs continue to be favoured. Adani and Tatas favoured.
- Boosting private sector investment in social infrastructure with revamped Viability Gap Fund (VGF)
-VGF is the biggest loot by corporates. As they will require time to make profit government gives this fund.
- Boosting private participation in space- private sector will be allowed to use ISRO facilities.
-India is a leader in space. Now it is going private. Dr. Abdul Kalam will cry in his grave.
-Atomic Energy related reforms.
- Research reactors in PPP Mode
- Establish technical facilities in PPP mode.
Privatisation seems to be the only Mantra. The richest 1% will benefit more. Reservation policy will die a natural death. Public sector undertakings will not be given funds and they will be killed like what has happened to Videsh Sanchar Nigam Ltd, Indian Petro Chemicals Ltd, Bharat Sanchar Nigam Ltd, Air India, HMT and many others. No labour laws will apply to these corporates.
If education, health, defense, space, technology- everything is going to be given to private corporates- Do we need a government? Hand over parliament to the corporates.
All this is done outside parliament using the pandemic to curtail any opposition.
Aatma Nirbhar Bharat– Part V
Finally, the Finance Minister has concluded her 5 days show. The conclusion of the press conference indicates the attitude of the government. When a question was asked about migrant labourers walking, she put the entire blame on the congress state governments and without mentioning name she said Rahul Gandhi, instead of sitting and talking to the labourers should walk with them carrying the children or luggage. When another question was asked about labourers paying for ticket she said she is not aware. For the question on from where money will come, she replied you should see where it goes and finally agreed that it will be though borrowing. When she was asked, “Madam, the people who were appreciating your statements on MSMEs, Farmers are now questioning after Part IV, including the BMS and Swadeshi Jagran Manch are questioning privatization of coal, defense etc. What is your reply? “The reply was “Tik Hai, Thank You” and she walked out.
In Netherland the government has appointed an opposition MP as Health Minister to handle the situation. Here we keep fighting and accusing. The Finance Minister blamed that the states have not utilized 86% of the borrowing limit allowed.
How can they borrow at market rate? How will they repay? States are asking RBI to permit borrowing at repo rate but that is not allowed.
The welcome announcement is increasing allotment to MGNREGS by RS.40000 Cr. The same scheme was once blamed as biggest waste by UPA government by this government.
On Health, announcement that one hospital in every district will have a block for infectious diseases is welcome. This should have been announced in January when first case was reported and the pandemic was spreading across the Globe. This would have helped to contain the spread. One public health lab in every block in the country is a welcome step. Should be established immediately.
On Education the entire focus of the announcements are to use online courses, TV channels, community radio and podcasts which cannot be accessed by majority of the children in the country but help Tata Sky, Airtel and other service providers.
For banks more difficulty is going to come. Default due to Covid should not be treated as defaults. So this should apply to all loans in the banking system which is more than 103 lakh Cr. No insolvency proceedings for one year for NPAs in MSMEs.
She announced that through an ordinance minimum threshold for referring cases to IBC will be increased from 1 lakh to 1 Cr rupees which is totally wrong. IBC circular dated 24th March 2020 has already announced this.
For those who still have faith in public sector which has contributed a lot for the growth of the country the announcement is shocking.
Private sector will be allowed in all sectors. Even in strategic sectors their presence will be reduced to 4 PSUs by merging or privatizing the others which are there. Surprisingly the MOS was not translating what FM was stating but using a Hindu note which appeared to be different at times. For example MOS emphasized on Privatisation, whereas Finance Minister mentioned merger. Sadly she mentioned mushrooming of PSEs will not continue whereas this government only keeps closing down or privatizing and where mushrooming is taking place is not known.
On funding to state governments she listed out what has been released already and mentioned in earlier parts.
The new announcement is that states can borrow up to 5% of State Gross Domestic Product instead of 3%. She was so angry that the states have not borrowed 86% of their increased limit under ways and means advances without bothering to know why they haven’t? It’s not a grant. They have to repay at market rate which can lead to insolvency of the state.
Now 3.5% of SGDP can be borrowed without any strings. Next 1% will be allowed only if 4 conditions are fulfilled.
- Implement one country one ration card
- Improve ease of doing business in districts
- Reform power distribution
- Improve urban local body revenues.
The first needs digitization which some states are finding difficult and those who don’t have cards are not included as no new registration takes place. Ease of doing business is to allow corporates to get cheap land and amenities. Power reforms is to help private DISCOMs and increase power tariff. Improving urban local body revenues is by taxing people. All are dangerous. If 3 out of this 4 is completed they can borrow more 0.5% of SGDP. State will become insolvent soon.
While summarizing the package the Finance Minister stated that the total is Rs.2097053 Cr out of this if we segregate Rs.801603 Cr is liquidity provided by RBI by reducing CRR and repo rate. But actually, banks have deposited Rs.850000 Cr with RBI because they are not able to lend. Another Rs.870000 Cr is the loan to be given by Banks and financial institution like NBFCs which borrow at around 11% from bank and charge up to 24% interest. Many corporates including Reliance have their own NBFCs and payment banks. Rs.425450 Cr is the amount to be spent by the government. Even in this Rs.64600 Cr is revenue foregone. Except Rs.40000 Cr for NAREGA, Rs.2800 for EPF, food grains provided (The actuals does not match with what was announced). Rs.8100 Cr for VGF and RS.4000 Cr for insurance guarantee the rest were already part of the budget announcements.
Till now RBI has not issued any circular regarding the loans.
So when we talk big of 5 trillion economy, 10% of GDP as relief package and self reliant India which will depend on private and international corporates we are cheating ourselves. I remember Former Finance Minister Mr. Arun Jaitley replying to the anchor in a conclave. When he was asked about reforming and boosting the economy, he showed his hands towards the international and national Titans of the corporate world and said “We are waiting for you”. This is before 4 years. Now the new Finance Minister also is giving out concession after concession to the corporates and waiting for them to uplift the economy. They will uplift themselves but not the economy because like the Finance Minister they also see this only as an opportunity to do what they want.
The biggest challenge is for the banking Sector. The Finance Minister announced that she will have weekly review with bank chiefs i.e. public banks. Remember the way she shouted at the Chairman, SBI at Guwahati and never regretted! With morale of the bank staff so low due to continuous work under lock down, waiting for wage revision and 5 day week for 3 years and drastic reduction of staff strength, stoppage of annual transfers, crisis is brewing.
That will be also used as an opportunity for privatisation.
Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.